AI Adoption Likely to Displace Jobs, Bank of England Governor Warns
The growing use of artificial intelligence across the economy is likely to lead to job displacement on a scale comparable to the Industrial Revolution, the governor of the Bank of England has said, while stressing the need for urgent investment in skills and training.
Andrew Bailey said the UK must ensure workers are equipped with the education and capabilities needed to move into roles that involve working alongside AI technologies. Speaking on BBC Radio 4’s Today programme, he said people seeking employment would find it “much easier” to secure work if they possessed AI-related skills.
However, Mr Bailey cautioned that the rapid uptake of the technology could create challenges for younger and less experienced workers. He raised concerns that entry-level roles may become harder to access as employers increasingly turn to automation.
“We need to think carefully about what this means for the pipeline of people coming into work,” he said, adding that while jobs that combine human input with AI may not eliminate opportunities altogether, the impact on early career pathways requires close attention.
AI has become increasingly embedded in both business operations and public services, allowing computers to analyse vast datasets, recognise patterns and perform complex tasks at speed. But its spread has fuelled anxiety about the effect on employment, particularly at a time of rising joblessness.
Official figures published this week show the UK unemployment rate climbed to 5.1% in the three months to October, with young people most affected. According to the Office for National Statistics, unemployment among 18- to 24-year-olds rose by 85,000 over the same period, marking the sharpest increase since late 2022.
While some analysts have blamed higher minimum wages and tax pressures for making firms more cautious about hiring junior staff, others argue AI is already reshaping recruitment decisions. Several companies have indicated that automation could reduce the need for graduate and entry-level hires, especially in professions such as law, accountancy and administrative services.
The global chair of accountancy firm PwC, Mohamed Kande, recently said the company was reconsidering its recruitment plans as AI changes the nature of work. Tasks that once required teams of consultants to analyse documents and data can now be completed in minutes using AI tools, he said.
Mr Bailey noted that concerns about technology disrupting jobs are not new, pointing to historical examples dating back centuries. He said the Industrial Revolution did not lead to lasting mass unemployment but did force many workers to move into different roles.
His expectation, he said, is that AI will follow a similar pattern, displacing jobs rather than eliminating work altogether. “We need to be prepared for that,” he added.
Despite the risks, Mr Bailey described AI as a major potential driver of future economic growth, particularly through productivity gains. He said the technology is likely to be adopted widely across the economy, though history suggests the full benefits may take time to materialise.
The Bank of England is already experimenting with AI, he said, but widespread, everyday use remains some way off. Ensuring the right conditions are in place – from skills development to infrastructure – will be crucial.
Beyond employment, Mr Bailey also addressed concerns about a possible AI-driven market bubble. The Bank has previously warned that valuations of some technology firms could be vulnerable to sharp corrections, similar to the dotcom crash.
While he acknowledged that many large AI-focused companies are currently generating strong cash flows, he said policymakers must closely monitor valuations and the potential fallout of any sudden market downturn.
